Barry's Fiscal Plan Stresses Austerity

By Thomas W. LippmanBy Thomas W. LippmanJuly 20, 1980

Mayor Marion Barry's newest fiscal rescue plan for the District of Columbia, which he is scheduled to officially unveil Monday, will call for painful austerity in city affairs, extensive help from Congress, borrowed money and White House support.

Aides to the mayor predicted that some details of the plan, which is likely to include reimposition of a commuter tax on professionals that was recently struck down and congressional assumption of two-thirds of the city's accumulated budget deficit, might seem surprising or shocking.

But, the aides agreed in numerous interviews last week, the general outlines of Barry's plan, two months in the making, have been perceptible for some time. It is based on familiar foundations. "Unless he's found oil in Anacostia," one aide said, "he doesn't have a lot of new options."

Few details of the plan are known, partly because the mayor has thrown a blanket of secrecy over his proposals and partly because the details were still being worked out at the end of the week.

Barry has promised that his speech on Monday will explain how he plans to do three things: eliminate a cumulative city deficit calculated by private auditors at $284 million, cover an additional deficit in the current fiscal year of at least $60 million and perhaps $100 million, and balance the city's budget through the 1983 fiscal year.

Ever since his discovery of a budget gap initially estimated at less than $30 million in January, Barry's young and image-conscious administration has grappled -- frequently unsuccessfully, by his own acknowledgement -- to get a handle on the budget crisis.

In the sharpest service and personnel cuts proposed in recent years, hundreds of city workers have been laid off and some city services pared to a bare minimum. The administration is daily juggling its expenditures to avoid running out of money by the end of the fiscal year, and some agencies are hobbling to the end of the fiscal year with makeshift supplies.

Still, loss of anticipated revenues and other factors have rendered useless three other rescue plans proposed by the mayor. Aides concede that while the budget gap will not be as high as the $170 million projected in March, it will be at least $60 million. And that will add to a $284 million deficit already accumulated when the current fiscal year began Oct. 1.

The major problem Barry will have to address is city revenues, which although projected to climb steadily over the next several years, are not keeping pace with the rising costs of delivering services. The Home Rule Charter gives Congress control over much of the city's revenue authority.

Barry said last week that if he had the power, he would raise the annual Federal payment to the city from its current maximum of $300 million to $571 million and would impose a "tax on nonresident income," or commuter tax. But he recognized that Congress would approve neither. Lacking that, he is expected to propose:

Further extensive reductions in the number of city employes. The most drastic staff reductions in the city's recent history are already under way, with Barry paring the District's payroll by about 1,500 jobs this fiscal year and 1,100 more -- including about 900 teachers -- being laid off by the public schools.

Barry's proposed total payroll for 1981 is 31,466 workers -- almost 7,000 fewer than in 1978 -- but even that figure is likely to be cut further. Among the departments where reductions are said to be planned are the Department of Human Services, the Department of General Services and the University of the District of Columbia.

The mayor said last week that he still intends to lay off 204 police officers on Oct. 1 unless accelerated retirements make it possible to save some of those positions.

A temporary wage freeze for city workers. The mayor said at a press conference last week that "at this time," he does not plan to give the workers a raise at least until he sees what Congress does with his proposed 1981 budget.

Legislation by which Congress would take back to the federal government that portion of the official $284 million deficit that was incurred before home rule. The mayor put this figure last week at $179 million.

Authorization from Congress to reinstate the tax on nonresident professionals, such as doctors, that was invalidated by the courts in February.

Further action by Congress to assume some of the cumulative liability for city employes pensions, on the theory that this liability was incurred before home rule. Arthur Anderson & Co., the city's auditors, has calculated that the District's unfunded pension liability will rise to $6 billion by 2004.

Some emergency program to bring welfare and Medicaid costs under control. Informed analysts of the budget calculate that the District will overspend its Congressional authorization in those areas by about $30 million in this fiscal year, and they predicted that Barry will have to ask Congress for a second supplemental appropriation to cover a deficit that it was illegal for the city to incur.

A budget for 1982 that would be only 4.5 percent higher than that for 1981 -- an increase in overall spending but less of an increase than would be required to keep pace with inflation. (The proposed 1981 budget is bigger than that for 1980 by nearly 10 percent.)

Changes in the seniority system that would allow the mayor to purge the payrolls of higher-salaried older workers, saving more money through fewer layoffs and preserving the jobs of more women and blacks than he can by cutting on the basis of seniority.

Long-term refinancing of the city's capital debt, probably through a bond issue, which would reduce debt service costs.

Barry has said that his program will involve "painful" political choices for him and sacrifice on the part of the District's residents and businesses. His policy, he has said, is to spread the pain around, pruning everything but eliminating nothing. He has also said that he wants to avoid any further tax increases for the city, at least through 1982 (his first term ends then.)

With the costs of services rising faster than tax revenues, however, and with the federal payment fixed at an annual maximum of $300 million, it appears unlikely that Barry can avoid tax increases without pruning services so drastically as to jeopardize his political position.

The Mayor said last week that he would not make his decisions for political reasons and that he had "no choice" about the need to cut spending. But there were indications that he will attempt to shift good part of the responsibility to Congress.

"I'm not trying to blame Congress," he said. "I'm just stating facts" about the deficit and how it developed.

Barry has sought, and is expected to get, Carter administration support for his legislative requests and authorization to increase city borrowing from the U.S. Treasury.

Unlike members of Congress and of the City Council, who have been told very little about the mayor's plans, Carter administration officials were briefed and consulted as the plan was developed.